Startup City ReduxHonduras: from RED to ZEDE to … Freedom?JUNE 27, 2013 by TOM W. BELL

A small country in Central America may just have created the freest cities in the world.

This column reported in November 2012 on an effort in Honduras to establish a unique kind of special development region. These regions, called RED after their Spanish acronym, would have created new cities with unprecedented independence from the central government. The RED had many supporters in the Honduran government’s executive and legislative branches, who aimed to bring low taxes, free trade, and the rule of law to their fellow citizens. The judicial branch did not share their enthusiasm, however.

The Supreme Court, worried that the RED statute would allow foreign sovereigns to rule Honduran territory, struck it down as unconstitutional. The first effort to establish in Honduras what have been called “startup” cities thus died. But Honduran reformers did not give up.

Honduras Tries Again

In January 2013, to safeguard their renewed effort to create startup cities, the Honduran Congress amended Articles 294, 303, and 329 of their Constitution. This addressed the objections that the Supreme Court had raised against the RED and set the stage for another attempt.

Soon the Honduran National Congress was considering legislation that would create Zonas de Empleo y Desarrollo Económico, (“Zones for Employment and Development of the Economy”), called “ZEDE” for short. The legislation triggered fierce opposition by municipalities, which feared competition from the new entities. Those objections were answered in floor debate by the observation that municipalities could themselves convert to ZEDE, winning all the same advantages. On June 12, 2013, the ZEDE legislation passed by a vote of 102 to 26.

In broad terms, the ZEDE legislation authorizes the creation of startup cities that will operate under the supervision, but not direct control, of the central government. So described, the ZEDE might not sound much different from China’s special economic zones or Dubai’s International Financial Centre. The details reveal, however, that the Hondurans have authored a daring new approach to governance.

But, if the stuff I've heard over the last 2 days is true, it is time to move Honduras from the back burner to the front burner & watch it closely.

Honduras, at this posting, is the murder capitol of the world, and for that reason alone, I'm sure it will be ruled out by some as a place to invest or live in.

Also, Honduras is very close to bankruptcy and is one of the poorest nations in Central America, if not the poorest.

The items mentioned above are what has prompted the Honduran legislature to enact the 'Free City' or 'Charter City' legislation. Unlike legislatures elsewhere they have seen an urgent need to do this, because they foresee the death of their nation, if they don't. According to what I've been told, this view is currently held by both the 'left' & 'right' political wings of the country.

The speed at which events are taking place is MUCH FASTER than I had opined in another thread.

The 'Free Cities' are to have autonomy in selecting their legal systems & setting up how they intend to govern. ATM, the leading candidate is English Common Law or some derivative of it. Also, 'arbitration' is going to be heavily relied upon.

Industry wise, there seems to be a strong emphasis now on banking & financial services. Plus, there are certain areas of the offshore services industry that will be explored.

There have been 3 potential areas designated for 'Free Cities' in Honduras. One is on the Caribbean coast near the island of Roatan.

All have ocean access, I do NOT know if there is Pacific access.

Something I did NOT know is that Honduras is the most bilingual country in Central America.(Spanish/English)

For me, I'm going to go to Honduras for the up close & personal, BOTG survey & face to face. The only problem I have is finding time to do it.

Last edited by de Heydon on Sun Jul 14, 2013 1:08 am; edited 2 times in total (Reason for editing : omission)